(The Canadian Press circulated the following article on January 17.)
TORONTO — Employment on Canadian railways will track sharply downward as their grizzled baby-boom workforces retire and are replaced by technology, observers say.
Canadian Pacific Railway Ltd. declined yesterday to comment on a report it will eliminate 400 white-collar jobs, 15% of its administrative workers, mostly through buyouts and early retirement.
But the trend in railway headcount has been and remains lower, especially on the office side.
“One thing to recognize about the railroad industry is that the demographics are very typical of the baby boomers, and probably more particularly the front end of the baby boom,” said Randy Cousins, an analyst at BMO Nesbitt Burns.
“So the railroads have a huge amount of natural attrition coming at them over the next five to 10 years,” Cousins said.
“There’s a huge opportunity for the railroads to improve productivity naturally.”
CP Rail’s productivity lags far behind bigger competitor Canadian National Railway , by one widely used measure.
CN’s operating ratio — operating costs as a proportion of revenues — was 63.3% in the third quarter of 2005, while CP Rail’s ratio was 77.4%.
Both were well below the average for major North American railways, which was 82.1% through the first nine months of 2005, said Tom White, a spokesman for the Association of American Railroads.
But White noted CN and CP Rail both tend to have higher — that is, worse — ratios on their U.S. lines.
And BMO’s Cousins cautioned that raw operating-ratio numbers can be misleading, as they reflect the products carried, the density of delivery points along rail lines, and other factors unrelated to management and workforce efficiency.
“It’s very dangerous to compare operating ratios between railroads,” Cousins said, adding that a better measure is the rate of improvement in operating ratio — and there CN “leads the industry by a country mile; they are an exceptional railroad.”